ACCT 212 Chapters 5-

$65 per order with 120

7,800

20 400

8,000

activity-based costing is NOT often used

ABC system may not conform

net operating income can be calculated as

(unit sales - units sales to break even) x unit contribution margin

contribution margin is first used to cover ___ expenses. Once the break-even point has been reached, contribution margin becomes ____

fixed, profit

to convert the formula for sales dollars required to attain a target profit to sales dollars required to break even, set the target profit to

0 dollars

750,000 and total costs of 360,000

175,000

900,000

30

when units sold exceeds units produced, net income under variable costing will generally be ___ net income under absorption costing

higher than

both ACB and traditional

income, costs, sales

once the break-even point has been reached, the sale of an additional units will lead to an increase in contribution margin that is ______ the increase in net operating income

equal to

a company has reached its break-even point when the contribution margin _____ fixed expences

equals

accumulates costs for

exactly one

abc does not conform to gaap

excludes manufacting, includes some nonman

t or f the margin of safety is the excess of break-even sales dollars over budgeted (or actual) sales dollars

false

total contribution margin equals

fixed expenses plus net operating income

when a segment is eliminated,

a traceable fixed cost will disappear and common fixed cost will remain unchanged

cost system assigns costs of unused or idle capacity to products

absorption

In abc

activity

causes consumption overhead resources

activity

relate to a single _____ measure

activity

focusing on activities to eliminate waste decreases processing time

activity-based managment

the contribution margin equals sales minus

all variable costs

define activitities, assign activity cost pools, calculate

assign cost to cost objects, prepare managment

setting up equipment, placing purchase orders, and arranging shipments to customers are all examples of __-level activities.

batch

what types of activities are performed

batch-level

contribution margin

becomes profit after fixed expenses are covered

systematic approch

benchmarking

when making a decision using incremental analysis consider the

change in sales dollars resulting specifically from the decision, and change in cost resulting specifically from the decision

to estimate the effect on profs for a planned increase in sales, multiply the increase in units sold by the unit

contribution margin

the calculation of contribution margin ratio is

contribution margin / sales

the term

cost driver

CVP is the acronym for

cost-volume-profit

what are assumptions of cost-volume-profit analysis?

costs are linear and can be accurately divided into variable and fixed elements,in multi product companies the sales market is constant

according to the CVP analysis model and assuming all else remains the same, profits would be increased by a(n)

decrease in the unit variable cost

when constructing a CVP graph, the vertical axis represents

dollars

duration

driver

when analysis of a change in profits only considers the costs and revenues that will change as the result of the decision is being made using

incremental anaylisis

activity-based costing system

may exclude, uses numerous

ABC the greater the number of activities

more costly and more accurate

transaction driver

number of bills

activities that occur regardless of

organization-sustaining

faclilty-level

organization-sustaining

how many batches are run or how many units are produced

organization-sustaining

activity-based costing uses numerous

overhead cost pools

first stage allocation

overhead costs

variable costing treats manufacturing overhead as a(n) _____ cost

period

treats organization-sustaining costs

period expenses

designing and advertising a product are all __-level activities

product

(selling price per unit x quantity sold) - (variable expense per unit x quantity sold) - fixed expenses

profit

unit- level activities

proportional to the number of units produced

ABC is for internal

reporting

overhead costs and customers

second stage

CVP analysis allows companies to easily identify the changes in profit due to changes in

selling price, volume, and costs

At the break-even point

the total revenue equals total cost and the net operating income is zero

to prepare a CVP graph, lines must be drawn representing total revenue

total expense, and total fixed expense

power to run production equipment would be a(n) __-level activity.

unit

what is needed to calculate profit?

unit contribution margin, unit sales, and total fixed costs

power to run production

unit level activity

variable expenses / sales is the calculation for the

variable expense ratio